EXHIBIT 10.2
SALT AND SURFACE LEASE
STATE OF LOUISIANA
PARISH OF ST. MARY
THIS AGREEMENT OF LEASE made and entered into this 21st day of
June , 1961, by and between JOHN TAYLOR CAFFERY, individually, and as Agent and
Attorney-in-Fact for MRS. MARCIE CAFFERY GILLIS, COL. MARCEL A. GILLIS, MRS.
BETHIA CAFFERY McCAY, PERCY L. McCAY, MRS. MARY LOUISE CAFFERY ELLIS, MRS. EMMA
CAFFERY JACKSON,, EDWARD R. JACKSON, LIDDELL CAFFERY, MRS. MARION CAFFERY
CAMPBELL, and GEORGE LEE CAMPBELL, M.D., by virtue of a power of attorney dated
September 1, 1954, passed before Edward F. Wegmann, Notary Public of Orleans
Parish, Louisiana, a certified copy whereof is attached hereto as part hereof,
currently in full force and effect, JOHN TAYLOR CAFFERY, as Agent and
Attorney-in-Fact for MRS. MARTHA GILLIS RESTARICK, MRS. KATHERINE BAKER SENTER,
MISS CAROLINE BAKER, MRS. BETHIA McCAY BROWN and DONELSON CAFFERY McCAY, by
virtue of a power of attorney passed before Patrick A. Schott, Notary -Public of
Orleans Parish, Louisiana, on December 1, 1956, a certified copy whereof is
attached hereto as part hereof, currently in full force and effect, JOHN TAYLOR
CAFFERY, as Agent and Attorney-in-Fact for LUCIUS HOWARD McCURDY, JR. AND JOHN
ANDERSON McCURDY, by virtue of a power of attorney passed before R.L. Redfearn,
Notary Public of Orleans Parish, Louisiana, on July 5, 1960, a certified copy
whereof is attached hereto as part hereof, currently in full force and effect,
EDWARD RADER JACKSON III, individually and as Trustee for DONELSON CAFFERY
JACKSON, a minor, by virtue of trust established by notarial act before Taylor
Caffery, Notary Public of Orleans Parish, Louisiana, June 20, 1955, currently in
full force and effect, duly
authorized by an order of the 24th Judicial District Court for the Parish of
Jefferson, State of Louisiana, dated January 5, 1961, a certified copy whereof
is attached hereto as part hereof, and THE J.M. BURGUIERES COMPANY, LTD., a
Louisiana corporation domiciled in New Orleans, Louisiana, herein represented by
Edward E. Burguieres and Joan Burguieres Brown, its Assistant-Secretary and
Managing Director and its Director, respectively, duly authorized by virtue of a
resolution adopted at a meeting of its Board of Directors, all as will appear by
reference to a certified copy of said resolution which is annexed hereto as part
hereof (all of the aforesaid parties being hereinafter sometimes called
"Lessor"), and THE CAREY SALT COMPANY, a Kansas corporation, authorized to do
and doing business within the State of Louisiana, herein represented by HOWARD
J. CAREY, JR., its President, duly authorized by resolution of its Board of
Directors, a certified copy of which is annexed hereto as part hereof,
(hereinafter sometimes called "Lessee").
W I T N E S S E T H:
1. Lessor, in consideration of the Development and Production Royalties
herein provided to be paid to Lessor, of the agreements of Lessee herein
contained, and other valuable considerations, hereby grants, leases and lets
exclusively unto Lessee for the purposes of digging, sinking, constructing and
building a shaft or shafts necessary or proper for the establishment and
operation of a salt mine, and/or boring, drilling or sinking a well or wells
into the salt, and mining and producing salt from the mine or mines and/or well
or wells to be established by Lessee, including the building of the necessary
surface facilities, structures, plants, conveyors, wharves, docks, warehouses,
power stations, telephone and telegraph lines, pipe lines, utility lines and
other structures and appurtenances in order to, produce, take care of, treat,
process, transport, store and own salt produced from the leased lands and for
dredging and maintaining the canal hereinafter specifically mentioned,
constructing roads and bridges, housing
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its employees, drilling and operating water wells and equipment in connection
therewith for use in connection with or incidental to operation of the salt mine
or mines and/or well or wells and other physical facilities, and for all
structures, equipment, servitudes, privileges and all other rights necessary,
useful or convenient in connection with any such operations conducted by Lessee
on the leased lands, all, however, subject to the terms and to the conditions
hereinafter stated, the following lands situated in the Pariah of St. [Mary,
State of Louisiana, to-wit:
The lands outlined in red on the map or aerial photograph
attached hereto and made a part hereof as Exhibit "A,"
including the land hereinafter referred to in Paragraph 5 (a)
shown in green on said map or aerial photograph; which said
lands shall hereinafter sometimes be referred to simply as
"Cote Blanche Island"; the lands herein leased being the
following described lands to-wit:
That certain Island or tract of land, together with all of the
rights, ways, privileges, servitudes and advantages thereunto
belonging or in anywise appertaining, situated in the Parish
-of St. Mary, State of Louisiana, known as Cote Blanche
Island, sometimes described as comprising all of Sections 19,
20, 21, 22, 23, 24 and 25 of Township 15 South, Range 7 East;
sometimes described as lying in Township 15 South, Range 7
East and being bounded on the South by Cote Blanche Bay, on
the West by lands of John M. Caffery in Sections 6 and 11 and
the lands of Cypremort Land Company in Section 14, on the
North by lands of John M. Caffery in Sections 6, 5 and 12 and
on the East by lands of John M. Caffery in Section 12, by
lands of The Chicago Title and Trust Company in Section 7, and
by lands of John M. Caffery in Section 13; and sometimes
described as comprising all or parts of Sections 5, 6, 7, 10,
11, 12, 13, 14 and 15 of Township 15 South, Range 7 East; and
sometimes more particularly described as follows:
(A) A tract of land measuring eight hundred arpents, more or
less bounded on the Westerly side by lands belonging in
February, 1836, to Dr. Walter Brashear and Owen Thomas, and
being the same tract which B.G. Tenney and R.C. Nicholas
purchased from C.N. Thomas and Susan Jett Thomas, wife of
Charles W. Howard, by act passed before W. Christy, late
Notary Public in and for the City of New Orleans, La., on the
4th day of February, 1836.
(B) Another tract of land adjoining the one described situated
on the Northwest end of Cote Blanche Island, containing 400
arpents, formerly known as Dr. Walter Brashear tract, and
which was purchased by the said Tenney and Nicholas at public
sale made on March 3rd, 1836, by John
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Moore, Parish Judge, as property belonging to Dr. Walter
Brashear and his children as heirs of Margaret Brashear, his
deceased wife.
(C) Another tract of land on the Southwest corner of said Cote
Blanche Island, containing about 320 arpents, bounded North
and East by lands formerly belonging to said Tenney and
Nicholas, and on the, South and West by the Bay and Sea Marsh,
and being the same tract purchased by the said Tenney and
Nicholas from Owen, Mary and Sophie Thomas, as per deed
executed and recorded in the Recorder's Office in the Parish
of St. Mary, in Book E of Conveyances, Page 73.
LESS AND EXCEPTING FROM THE ABOVE DESCRIBED PROPERTY:
That portion of the extreme northern edge of Cote Blanche
Hummoch, commonly called Cote Blanche Island, situated
in-Township Fifteen (15) South, Range seven (7) East,
Southwestern Land District of Louisiana in the Parish of St.
Mary, immediately south of, and rendering fractional, Section
Five (5) of said Township and Range, and containing in the
aggregate 7.7b acres and to be composed of three tracts of
0.94 acres, 1.86 acres and 4.96 acres, all as delineated upon
a map or plat made by Walter Y. Kamper, Surveyor and Civil
Engineer, dated in May, 1917, attached to and made part
thereof for a full descript on of the property conveyed, to an
act of sale by the J.M. Burguieres Company, Ltd., and Donelson
Caffery to The Albert Hanso Lumber Company, Ltd., dated August
31, 1917, recorded January 4, 1919, Book 3-T page 473 No.
45501, conveyance records of St. Mary Parish, Louisiana.
2. Lessee, in exercising the rights herein granted, shall not use
any portion of the surface of the leased property other than:
(A) A 160 acre tract of land to be selected by Lessee within
forty-five (45) days after the approval of surveyors as provided
in Paragraph 36, surveyed by a surveyor approved by Lessor and
the survey placed of record by Lessee in the public records of
St. Mary Parish, Louisiana, the request for approval of surveyors
to be made within forty-five (45) days of the effective date of
this lease. The tract shall not include any of the present Shell
production facilities or wellheads.
Lessee shall have the exclusive use of this 160 acre tract
of land, shall have the right to fence or otherwise enclose same,
and may use the surface thereof for
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any and all legal uses and purposes whatsoever that it may desire
in connection with the salt business contemplated herein.
It is understood and agreed that on said 160 acre tract of
land Lessee's principal surface facilities shall be situated,
including, but without limitation on the rights and uses
otherwise authorized, the surface entrance to Lessee's mine or
mines, shaft or shafts, well or wells, and Lessee's plants,
offices, warehouses, power stations and all other surface
structures other than hereinbelow mentioned.
(B) Lessee contemplates the improvement and use of a canal
presently running from the Intracoastal Canal in a southerly
direction near the western edge of the leased premises,
originally dredged by Humble Oil & Refining Company, and the
extension of said canal by Lessee, turning East and traversing
the island a sufficient distance to have barges reasonably close
to the surface facilities of Lessee. For this purpose Lessee
shall have the right to dredge and maintain such a slip or canal
across the leased premises with a maximum width of 200 feet. The
canal sides shall be piled and bulwarked where the canal first
enters the leased premises for a distance o(pound)at least
thirty-five (35) feet. Lessee obligates itself to maintain its
canal, bulwarks and piling in good repair so as to reasonably
guard against erosion. At such time as this lease may terminate
Lessee agrees, upon request of Lessor, to pile and bulwark the
entire entrance to the canal, where it first enters the leased
premises, and to backfill the canal with clam shells or gravel or
similar material for a distance of at least thirty-five (35) feet
from its entrance on the island so as to guard against future
erosion.
Lessee shall not extend the canal beyond the 160 acre tract
hereinabove referred to and whereon Lessee's principal surface
facilities are to be situated.
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(C) A strip of land 150 feet in width between the location
of Lessee's principal surface facilities and its canal
hereinabove referred to in subparagraph 2(B), a strip of land 150
feet in width between the location of Lessee's principal surface
facilities and Cote Blanche Bay, and a strip of land 155 feet in
width along each bank of the afore mentioned canal; said 150 foot
strips of land to be used by Lessee primarily for transporting
its products, as well as materials, supplies and equipment, and
waste disposal, whether by truck, conveyor belt, pipe line, or in
any other manner. Any installations or improvements by Lessee on
each of said 150 foot access strips shall be so constructed or
installed as to permit Lessor to cross from one side to the other
on foot or in vehicles, at approximately surface level, at some
point approximately midway of the length of each of the two said
150 foot access strips, provided, however, that no bridge or
underpass shall be required over or under the canal referred to
in subparagraph 2(B) above, or the 155 foot strips on either side
thereof. Said 155 foot strips are intended primarily for
wharfage, dockage or storage, but may likewise be used for the
same purposes as the 150 foot strips.
The strips of land herein authorized for Lessee's use are
not to be fenced, or otherwise enclosed; it being intended that
Lessors are to have access thereto and the use thereof insofar as
such use does not interfere with or disturb the rights of Lessee.
Lessee shall not construct facilities on the 150 foot strips
(from Lessee's principal surface locations to the shore of Cote
Blanche Bay and to the canal to be installed by Lessee) in such a
manner as to cut off or hinder vehicular traffic from moving
across the same from one side to the other in at least one place
on each of them, so as to allow ready access by Lessor, its heirs
or assigns, to all parts of Cote Blanche Island.
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(D) Lessee shall also have the right to use the surface of
such additional portions of the leased premises as may be
reasonably necessary for drilling, maintaining and operating
water wells and brine wells at any reasonable place or places on
the leased premises (including the 160 acre tract hereinabove
described), with water and brine lines therefrom to Lessee's
surface facilities, and for constructing and maintaining
telephone and telegraph lines, pipe lines, power lines, gas
lines, roads and other like facilities contemplated hereunder,
together with the use of existing roads and the right of ingress
to and egress from and across said leased premises for the proper
enjoyment of the rights granted herein. At the request of Lessor,
Lessee shall bury below plow depth any water, pipe or brine lines
installed by it outside of the 160 acre tract.
3. Lessor shall have the right to the full use and enjoyment of
the surface of all other portions of the leased premises not
hereinabove set forth as subject to use by Lessee, together with the
right to use the 150 foot strips as hereinabove referred to in
subparagraph 2(C), insofar as Lessor's use thereof does not interfere
with or disturb the rights of Lessee.
4. Lessor shall have the full right to grant future oil, gas and
other mineral leases, except salt, provided that each such future oil,
gas and mineral lease shall expressly obligate the lessee therein to
cooperate with Lessee herein in the conduct of its operations in order
that the purposes of both leases may be best effectuated, and Lessee
herein expressly agrees to cooperate with any such future oil, gas and
mineral lessee in the conduct of its operations in order that the
purposes of both leases may be best effectuated, particularly, but not
limited to, arranging with the oil, gas and mineral lessee so as to
permit drilling of oil and/or gas wells within the areas affected by
this lease.
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5. It is expressly understood and agreed that unless written
permission of Lessor is first obtained:
(A) there is to be no mining of salt, drilling of brine
wells, or use or sale of brine for its salt content by Lessee, or
anyone claiming by or through Lessee, on or under the land
identified in green on map or aerial photograph attached hereto
and made a part hereof as "Exhibit `A' "; and
(B) there is to be no digging for or mining of rock salt by
Lessee, or anyone claiming by or through Lessee, in or from any
formation, strata or horizon lying below a depth of 3,000 feet
from the surface of the earth, provided this shall not restrict
the right of Lessee to drill brine wells and conduct brine
operations at a greater depth.
Except to such extent as is herein otherwise specifically
authorized, it is intended hereby that neither Lessee nor Lessor, nor
anyone claiming by or through either of them, is to (i) mine salt,
drill brine wells, or use or sell brine for its content from said land
referred to in subparagraph 5(A) above; or (ii) dig for or mine rock
salt from depths below 3,000 feet from the surface of the earth.
6. Lessor shall, however, have the right to leach out or excavate
or grant to others the right to leach out or excavate salt cavities on
said land hereinabove referred to in subparagraph 5(A), and said right
is hereby expressly reserved to Lessor. It is recognized and
understood that the reservation by Lessor of the rights herein set
forth with respect to said land referred to in subparagraph 5(A)
above, is, among other purposes, specifically in order that Lessor may
retain sufficient area and salt wherein salt cavities may be created
for the storage of gaseous and liquid substances, and, accordingly,
Lessor shall have the right to use and/or authorize others to use such
cavities for the storage of gaseous and liquid substances; provided,
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however, that no fissionable or radioactive materials shall be stored
in any such cavity or cavities at any time. Lessor agrees specifically
to assume full responsibility and liability for any loss or damage in
proper amount that Lessee may sustain in any manner arising out of or
in connection with the excavation, construction, installation, care
and/or maintenance of any such cavity or cavities or the use thereof,
or the exercise by Lessor or any one claiming by, through or under
Lessor, of any of the rights reserved above, including, but not
limited to, breaking into any mine or mines, and/or well or wells, of
Lessee, or loss or damage to any surface facilities or structures of
Lessee; and Lessor agrees, immediately prior to the commencement of
any such operations, to indemnify Lessee against any and all such loss
and damage, and to furnish bond or carry adequate insurance for the
purpose, delivering to Lessee evidence thereof in an acceptable form.
7. The lands hereinabove described in this lease are subject to
an oil, gas and mineral lease executed by John Taylor Caffery, et
alii, as Lessor, under date of November 25th, 1953, in favor of Shell
Oil Company, as Lessee, an extract of the provisions of which lease is
recorded in St. Mary Parish, Conveyance Book 8-Q, Entry Number 89040,
and amended by instrument dated November 25th, 1953, recorded in St.
Mary Parish, Conveyance Book 8-W, Entry No. 90665, and in which lease
Lessor reserved the right to thereafter mine and produce salt from the
said premises, Lessor herein granting unto Lessee herein all rights so
reserved as to the mining and production of salt by Lessor in the
above referred to lease and amendment, except those specifically
reserved herein to Lessor.
8. No map or plat herein referred to, or required to be furnished
hereunder, shall be used by anyone other than the parties hereto for
the purposes of this agreement as a basis of attempting to establish
what any person may believe to be the boundary of Cote Blanche Island,
and the parties hereto shall not be stopped from asserting as against
third parties that
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some other boundary is the correct boundary of Cote Blanche Island. In
other words, any such map used or referred to in connection herewith
is for the purposes of this agreement and the convenience of the
parties hereto, and shall have no other effect, bearing, consequence,
result, applicability, reference or relevancy to any other ownership,
map, thing, or otherwise whatsoever.
9. For the purposes of this lease, the following definitions
shall apply:
(A) "Salt" shall mean chloride of sodium, whether shipped in
the form in which it is mined, or whether it is additionally
crushed, evaporated, otherwise processed or refined before
shipment.
(B) "Rock Salt" refers to salt produced by mining, as
distinguished from salt produced by brine operations or other
processes.
(C) "Ton" shall refer to a short ton of 2,000 pounds.
(D) "Salt Shipped" shall mean all salt shipped from the
leased premises, or used or consumed on the premises.
(E) "Minimum Tons of Salt to be Shipped" shall indicate the
number of tons which, as a minimum, Lessee is obligated either to
ship each calendar year this lease shall remain in effect
subsequent to the Primary Term, or pay Production Royalty thereon
just as though the same had been shipped.
(F) "Primary Term" shall refer to the period of time between
the effective date hereof and the date of completion of
Development Work; provided, however, that in no event shall the
Primary Term of this lease extend beyond a period of five (5)
years from the effective date hereof.
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(G) "Development Work" refers to the erection of the
necessary physical facilities, the sinking of the shaft or
shafts, the opening of working faces, and such other work as is
preliminary to the actual commencement of mining operations,
together with the initial mining, producing and shipping by
Lessee of 190,000 tons of salt from the leased premises,
exclusive of salt excavated or otherwise removed in the digging
of the shaft or shafts.
(H) "Development Royalty" refers to the annual sum of
$10,000.00 herein provided to be paid by Lessee to Lessor during
the Primary Term of this lease, and shall cover and represent all
royalty due on the salt removed in the digging of the shaft or
shafts and the removal of the initial 190,000 tons of Salt
Shipped from the leased premises during said Primary Term.
(I) "Production Royalty" refers to the royalty payable by
Lessee to Lessor subsequent to the expiration of the Primary Term
for Salt Shipped or on the Minimum Tons of Salt to be Shipped.
(J) "Base Period" means the initial fractional part of a
calendar year, if any, and the first full calendar year for which
Production Royalty is due, this being a period which commences
immediately when the Primary Term of this lease comes to an end.
(K) "Basic Production Royalty" means Production Royalty per
ton of Salt Shipped to be paid by Lessee to Lessor quarterly each
year after the Primary Term hereof, subject to annual retroactive
adjustment for each calendar year subsequent to the Base Period
in the first quarter of the following year in the event of a
change in the Base Average Price or Revised Base Average Price
for that particular year.
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The Basic Production Royalty shall be' twenty-two cents
(22(cent)) per ton of Salt Shipped, until adjusted as hereinbelow
provided in paragraph 12.
The amount of the Basic Production Royalty to be paid by
Lessee to Lessor per ton shall be subject to adjustment upward or
downward in 2 1/2(cent) per ton units, in the manner hereinafter
more fully set forth in paragraph 12, and when so adjusted shall
thereafter continue as the Basic Production Royalty to be paid by
Lessee to Lessor, subject to retroactive adjustment each year,
until a further adjustment results from a subsequent change in
the Base Average Price or Revised Base Average Price.
(L) "Deduction from Basic Production Royalty" shall mean an
amount of two cents (2(cent)) per ton of Salt Shipped during the
first full thirty (30) calendar months and the initial fractional
part of a calendar month, if any, for which Production Royalty is
due, which amount shall be deducted from the Basic Production
Royalty otherwise due during such months.
(M) "Average Price" means, for the period involved, the
average price received by Lessee from the Sale in Bulk of rock
salt produced from the leased premises of the grades Coarse Rock
Salt and Mine Run or Mill Run Rock Salt, determined by dividing
the total dollars received by Lessee from the Sale in Bulk of
Rock Salt of said grades, f.o.b. mine (or adjusted to allow for
any freight factor included in the price), by the total tons of
said grades sold. There shall be included in such determination
for any period involved the tons of Mine Run or Mill Run Rock
Salt used or consumed by Lessee, its successors or assigns, and
not sold to a purchaser, as though sold at the Current Market
Price of Mine Run or Mill Pun Rock Salt prevailing on the last
day of the period in question.
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(N) "Base Average Price" means the Average Price for the
Base Period, but in no event shall the Base Average Price be less
than $3.70 per ton.
(O) "Annual Average Price" means the Average Price for each
calendar year subsequent to the Base Period. This Annual Average
Price shall be determined for each calendar year during the first
quarter of the following year.
(P) "Revised Base Average Price" shall be the amount
determined in the manner hereinafter set forth as an adjustment
of the Base Average Price or a Revised Base Average Price
previously determined and prevailing.
In the event the Annual Average Price as above defined
should, for a particular year, be as much as fifty cents
(50(cent)) per ton above or below the Base Average Price or the
Revised Base Average Price theretofore prevailing, then the Base
Average Price or Revised Base Average Price theretofore
prevailing shall be adjusted up or down in the amount of fifty
cents (50(cent)) per ton, or multiples thereof, according to
whether or not the Annual Average Price increased or decreased.
Adjustments in the "Base Average Price or Revised Base
Average Price shall only be in units of fifty cents (50(cent)),
it being intended that no adjustment is to be made for the
fractional part of any fifty cent (50(cent)) unit that the Annual
Average Price for a particular year is above or below the Base
Average Price or Revised Base Average Price. For example, if the
Annual Average Price for a given year reflects a difference of
forty-nine cents (49(cent)) above or below the prevailing Base
Average Price or Revised Base Average Price there is to be no
adjustment; if such difference is in the amount of sixty-three
cents (63(cent)), the Base Average Price or Revised Base Average
Price shall be
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increased or decreased fifty cents (50(cent)), as the case may
be; if such difference is in the amount of $1.47, the Base
Average Price or Revised Base Average Price shall be increased or
decreased $1.00, as the case may be.
(Q) Use herein of the term "Base Average Price or Revised
Base Average Price" means Base Average Price until such time as a
Revised Base Average Price has been determined and thenceforth
means Revised Base Average Price.
(R) "Coarse Rock Salt" as used herein means those grades or
screenings of Rock Salt, exclusive of Mine Run or Mill Run Rock
Salt, Sold in Bulk, 90% or more of which, in a screen analysis,
is retained on a U.S. Standard ]6 mesh sieve, and which contains
no additives.
It is recognized by the parties that at the present time
Coarse Rock Salt consists of the following four grades:
(1) No. 2
(2) No. 1
(3) "A" Grade
(4) "C" Grade.
It is further recognized that classification, description
and identification of grades of Coarse Rock Salt may vary or
change from time to time, and accordingly, it is intended that
Coarse Rock Salt as used herein shall continue to include all
salt presently included in the grades above mentioned,
notwithstanding any change in the manner in which such salt may
hereafter be classified, described or identified, and, further,
to include in Coarse Rock Salt any and all other Rock Salt
grades, other than Mine Run or
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Mill Run Rock Salt, Sold in Bulk, 90% or more of which, in a
screen analysis, is retained on a U.S. Standard 16 mesh sieve,
and which contains no additives.
(S) "Mine Run or Mill Run Rock Salt" is that Rock Salt Sold
in Bulk which has been subjected to primary and secondary
crushing so that it passes through a screen with approximately
5/8" openings, and not otherwise classified into grades or sizes.
(T) "Current Market Price of Mine Run or Mill Run Rock Salt"
is considered as the price at which Southern Louisiana Mine Run
or Mill Run Rock Salt of equal quality is available from other
producers of salt, f.o.b. mine, to any purchaser of salt in
quantities in excess of five thousand (5,000) tons of salt on an
annual contract basis, and the parties agree that this price at
the present time is $3.70 per ton.
(U) "Sale in Bulk" or "Sold in Bulk" as used herein shall be
considered as any sale of Coarse Rock Salt or of Mine Run or Mill
Run Rock Salt not in bag or container form or in compressed
shapes.
10. Subject to the terms, conditions and provisions hereinafter
set forth, this lease shall remain in force for a period of
ninety-nine (99) years from the effective date hereof; provided,
however, that in the event actual mining operations are not conducted
during any five (5) consecutive years subsequent to the Primary Term
hereof, Lessor shall, at its option, have the right to cancel and
terminate this lease, notwithstanding the payment of minimum
Production Royalties during any such five (5) year period, by giving
notice in writing to Lessee that it exercises its option for such
cancellation and termination, such cancellation and termination to
become effective sixty (60) days from the date of receipt by Lessee of
such notice from Lessor of its intent to terminate.
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Lessee agrees, subject to its right to surrender and terminate this
lease as herein otherwise set forth, that it will commence such Development
Work as is preliminary to the actual commencement of mining operations
within two (2) years from the effective date of this lease, and will
thereafter proceed with such Development Work with reasonable diligence.
Lessee shall have the right to surrender and terminate this lease
during the Primary Term hereof by giving Lessor notice in writing of its
intention to so surrender and terminate the lease at least sixty (60) days
prior to the date on which such surrender and termination is to become
effective, and said notice shall set forth specifically the date on which
the surrender and termination is to become effective. Upon compliance with
this provision, this lease shall cease and terminate on the effective date
of surrender as set forth in the aforementioned notice, and the rights and
obligations of the parties shall be the same as though the lease had come
to an end through expiration of its term.
Should Lessee exercise its right to terminate this lease during the
Primary Term hereof, Lessee agrees and obligates itself to restore
substantially to its original condition the surface of the property other
than the canal which shall be governed by subparagraph 2(B) herein. Should
Lessor, within thirty (30) days from the date Lessor receives notice from
Lessee of its intent to terminate the lease, so request in writing, Lessee
agrees and obligates itself to plug or fill any holes or shafts created by
it on the leased premises, other than the canal, provided Lessor makes
available for the purpose an adequate supply of dirt situated on the 160
acre portion of the leased premises referred to in subparagraph 2(A), and
provided further that such dirt is to be taken reasonably evenly off the
surface so as to not leave any other holes or objectionable depressions in
or on the surface of the premises.
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After expiration of the Primary Term, Lessee shall have the right to
surrender- and terminate this lease upon giving Lessor notice in writing of
its intent to so surrender and terminate the lease at least two (2) years
prior to the date on which such surrender and termination is to become
effective, and said notice shall state specifically the date on which said
termination shall become effective. Upon compliance with this provision,
this lease shall cease and terminate on the effective date of the surrender
as set forth in the above mentioned notice, and the rights and obligations
of the parties shall be the same .as though the lease had come to an end
through expiration of its term.
Subject to the additional Production Royalty payment hereinafter set
forth, Lessee shall have the right, after the expiration of the Primary
Term hereof, to surrender and terminate this lease upon shorter notice of
its intention to do so, provided it gives Lessor notice in writing of its
intent to so surrender and terminate the lease and sets forth specifically
the date on which such surrender and termination is to become effective. In
the event of termination on less than two (2) years notice, Lessee agrees
that if the Production Royalty for the period from date of notice to date
of termination is less than $20,000.00, it will supplement the said amount
so that Lessor shall receive a minimum of $20,000.00 Production Royalty for
such period. While it is contemplated that notice of termination under the
provisions of this paragraph will not be given by Lessee arbitrarily or
without just cause, and that Lessee will not so terminate except in the
exercise of sound business judgment, based on facts and circumstances
beyond Lessee's control that render it unprofitable, impracticable or
undesirable for Lessee to continue its operations, if Lessor is of the
opinion that Lessee has acted arbitrarily in giving such notice, it shall
so notify Lessee in writing, and any dispute between Lessor and Lessee in
connection therewith shall be determined by arbitration, in accordance with
the provisions of paragraph 27 hereof. In the event
17
it is agreed or found by arbitrators that the termination is arbitrary,
then the minimum Production Royalty to be paid by Lessee to Lessor for the
period from date of notice to date of termination shall be $56,000.00
instead of $20,000.00.
11. During the Primary Term of this lease, as hereinabove defined,
Lessee shall pay to Lessor an annual Development Royalty of $10,000.00, and
which Development Royalty shall be in lieu of all Production Royalties
during the Primary Term including Production Royalties on all salt removed
in the digging of the shaft or shafts and for the initial 190,000 tons of
salt mined, produced and shipped from the leased premises during the
Primary Term hereof. The payment of the Development Royalty of $10,000.00
for the first year of the Primary Terra is acknowledged. Subsequent
Development Royalties for succeeding years of the Primary Term are to be
paid annually in advance, beginning on or before one year from the date of
this agreement of lease.
It is understood and agreed that each annual Development Royalty
payment is intended to cover a full twelve month period, and the
Development Royalty of $10,000.00 for the then current year during which
the Primary Term of this lease comes to an end is to be prorated, such
proration to be in the same proportion as that elapsed portion of the year
for which such Development Royalty has been paid bears to a full twelve
month period, and Lessee shall be entitled to apply the remaining portion
of that year's Development Royalty on Production Royalty accruing for salt
thereafter mined, produced and shipped.
12. After expiration of the Primary Term Lessee shall pay Lessor
Production Royalty on all Salt Shipped hereunder as follows:
(A) During the first thirty (30) full calendar months and the
initial fractional part of a month, if any, for which Production
Royalty is payable, Lessee shall
18
pay Lessor the Basic Production Royalty of twenty-two cents (22
(cent)) per ton, subject to the provisions for adjustment as
hereinbelow set forth, from which shall be deducted the two cents
(2(cent)) per ton Deduction from Basic Production Royalty.
(B) Subsequent to the first thirty (30) full calendar months
and the initial fractional part of a month, if any, for which
Production Royalty is payable, Lessee shall pay Lessor the Basic
Production Royalty of twenty-two cents (22(cent)} per ton,
subject to the provisions for adjustment hereinbelow set forth.
The Basic Production Royalty shall be adjusted up or down,
as the case may be, whenever upon expiration of any calendar year
subsequent to the Base Period it is determined that the Annual
Average Price for that particular year is above or below the Base
Average Price or Revised Base Average Price previously determined
and prevailing to such extent as to cause an adjustment therein.
The Production Royalty per ton payable by Lessee to Lessor
for the preceding calendar year shall be increased if the Revised
Base Average Price for such preceding calendar year has increased
and shall be decreased if the Revised Base Average Price for such
preceding calendar year has decreased, the amount of retroactive
adjustment of Production Royalty for such preceding calendar year
to be calculated as follows:
Divide the amount of the increase or decrease in the Revised
Base Average Price for the particular calendar year above or
below the previous Base Average Price or Revised Base Average
Price by fifty cents (50(cent)) and multiply the result by
2 1/2(cent). The amount thus determined is the amount by which
the Production Royalty for such calendar year is to be increased
or decreased, as the case may be.
19
The amount by which Production Royalty is to be adjusted for
a particular calendar year is to be added to or subtracted from
the Basic Production Royalty paid for that year, and the amount
thereby determined shall thenceforth be the Basic Production
Royalty for payment of Production Royalty during the year then in
progress and thereafter, subject to further adjustment in
accordance with the provisions hereof, and the previous Basic
Production Royalty theretofore prevailing shall no longer be
applicable.
As an example of the foregoing: if the Revised Base Average
Price for a particular year shows an increase of $1.00 above the
Base Average Price or Revised Base Average Price theretofore
prevailing, then $1.00 is to be divided by fifty cents
(50(cent)), and the resultant quotient of two is then multiplied
by 2 1/2(cent), thereby establishing a five cent (5(cent))
increase in Production Royalty to be paid by Lessee to Lessor
retroactively for the preceding calendar year. This five cent
(5(cent)) increase is then to be added to the Basic Production
Royalty theretofore prevailing. Assuming this amount to have been
twenty-two cents (22(cent)), a new Basic Production Royalty of
twenty-seven cents (27(cent)) per ton would thereby be
established, and Lessee would thereafter pay to Lessor a Basic
Production Royalty of twenty-seven cents (27(cent)) per ton,
until such time as the Revised Base Average Price was again
adjusted, where upon the applicable increase or decrease in the
Basic Production Royalty would again be determined in the same
manner as hereinabove set forth, and a new Basic Production
Royalty established. If in the above example the $1.00 increase
in the Base Average Price or Revised Base Average Price were to
occur during the period in which the Deduction from Basic
Production Royalty is applicable, the following would result: To
the Basic Production Royalty of twenty-two cents (22(cent)) would
be added the indicated five cent (5(cent)) increase in Production
Royalty,
20
producing a Basic Production Royalty of twenty-seven cents (27(cent)),
which would thereafter, until further adjustment, be the Basic Production
Royalty. For this year, however, since the Basic Production Royalty is
subject to the two cent (2(cent)) per ton Deduction from Basic Production
Royalty, the Production Royalty retroactively payable for the preceding
calendar year would be twenty-seven cents (27(cent)) minus two cents
(2(cent)), or twenty-five cents (25(cent)) per ton.
Adjustment of Production Royalty by the payment to Lessor by Lessee of
any additional amount due retroactively for a preceding calendar year shall
be made during the first quarter of the following year, and in no event
shall an adjustment of Production Royalty be retroactive for a greater
period then the preceding calendar year.
Whenever any reimbursement is due Lessee by Lessor retroactively for a
particular calendar year, by reason of a decrease in the Revised Base
Average Price, Lessee shall be entitled to retain royalty thereafter
accruing to Lessor and to apply same to the credit of Lessor until Lessee
has been fully reimbursed the amount of such excess payment; provided,
however, that Lessor may, at its option, remit to Lessee such excess
payment in cash. Lessor agrees that should they or any of them transfer,
sell or otherwise dispose of their interest in the property, or in
royalties accruing therefrom, or any portion thereof, such disposition is
to be made expressly subject to Lessee's right to retain future royalty, as
above set forth, and to reimburse itself for any excess royalty theretofore
paid to Lessor and not previously reimbursed to Lessee.
13. Lessee shall pay Production Royalties to Lessor quarterly in January,
April, July and October of each year, each payment to cover Production Royalty
for Salt Shipped during the immediately preceding three (3) month period, and
the payment in January of each
21
year shall include any amount payable under the provisions of paragraph 16
hereof, in the event the minimum number of tons of salt were not shipped during
the preceding year.
14. In addition to the Production Royalty set out above, Lessee also agrees
to pay all severance, sales, use and/or production taxes with respect to the
salt mined, produced and shipped by Lessee or with respect to other operations
of Lessee under this lease, required by local, State or Federal laws, even
though the said laws may impose the payment of said taxes upon Lessor.
15. Lessor shall be furnished with two copies of all the severance tax
reports filed by Lessee with the appropriate authorities.
16. During the entire term, expecting the Primary Term, of this lease the
following minimum tons of salt must be shipped by Lessee each year as set out in
the schedule below, or Lessee must pay Lessor Production Royalty on such minimum
number of tons of salt, just as though they had been shipped, in order to keep
the lease in full force and effect:
MINIMUM NUMBER OF TONS OF SALT
YEARS TO BE SHIPPED
----- ------------------------------
First three (3) full calendar years and initial fractional 189,000 tons per year
part of year for which Production Royalties are to be Paid
Next three (3) full calendar years 216,000 tons per year
Next three (3) full calendar years 250,000 tons per year
Remaining term of lease 300,000 tons per year
provided, however, that during the calendar year in which the Primary Term of
this lease comes to an end and the payment of Production Royalty commences, the
minimum Production Royalty to be paid for the remainder of that year shall not
be on the basis of 189,000 tons of salt, but shall be prorated in, the
proportion that the remainder of the year after expiration of the Primary Term
bears to the full year, subject to those provisions of paragraph 10 above which
relate to a minimum Production Royalty to be paid Lessor in the event Lessee
terminates this lease subsequent to the Primary Term hereof on less than two (2)
years notice. In the event the term of this lease ends on other than the last
day of a calendar year., the minimum Production Royalty
22
for the first fractional part of the calendar year in which the term of this
lease ends shall be prorated in the proportion that such fractional part of the
year in which the lease is in effect bears to a full calendar year.
The intent of the foregoing is that the penalty Lessee shall suffer in the
event the minimum tons of salt are not shipped is that Lessee shall pay Lessor
such amount of Production Royalty as this lease may provide during; the
particular calendar year within which less than the minimum tons of salt are
shipped, calculated upon the premise that the minimum number of tons of salt had
been shipped. This minimum Production Royalty shall be cancelled out each year
and there shall be no carry over or carry back as to either party.
17. In addition to the taxes referred to in paragraph 14, Lessee shall bear
and pay all taxes imposed upon the entire 160 acre tract hereinabove described
in subparagraph 2(A), as well as the taxes on the full area of each 150 foot and
155 foot strips hereinabove provided for in paragraph 2 (whether or not the
entire area of each such 150 foot and foot 155 foot strips are being used by
Lessee).
Lessee shall also bear and pay all taxes imposed upon property and
improvements placed by Lessee on the lands herein leased, and shall likewise
bear and pay all additional taxes which are imposed upon or are directly or
indirectly attributable to Lessee's operations and activities upon the leased
premises, provided that the Lessee shall not be obligated to pay increased taxes
on the Lessor's lands other than those portions hereinabove set forth and those
in actual physical use by Lessee. All other taxes are to be borne and paid by
Lessor.
When the properties are not assessed separately, each party shall bear his
proportionate share on the basis of their respective areas or values, whichever
is the more appropriate.
18. Until such time as Lessee may be notified of a change in ownership in
accordance with the provisions of paragraph 28, the royal ties provided for
hereunder shall be
23
paid to Lessor in the following proportions, by mailing to the address shown
following each respective name:
1. The J.M. Burguieres Co., Ltd.
Louisa Post Office, Louisiana 3/8 of 8/8 or 96/256
2. Mr. John Taylor Caffery
1806 National Bank of Commerce Building
New Orleans 12, Louisiana 1/8 of 5/8 or 20/256
3. Mrs. Mary Louise Caffery Ellis
c/o The National Bank of
Commerce in New Orleans
Corner Baronne & Common Streets
New Orleans 12, Louisiana 1/8 of 5/8 or 20/256
4. Mrs. Marion Caffery Campbell
1010 22nd Street
Beaumont, Texas 1/8 of 5/8 or 20/256
5. Mr. Liddell Caffery
808 West Beach Pass
Pass Christian, Mississippi 3/32 of 5/8 or 15/256
6. Mrs. Marcie Caffery Gillis
638 S. Beach
Waveland, Mississippi 1/16 of 5/8 or 10/256
7. Mrs. Martha Gillis Restarick
6 Arlington Court
Rome, Georgia 1/16 of 5/8 or 10/256
8. Mrs. Katherine Baker Senter
6031 S. Robertson Street
New Orleans 18, Louisiana 1/16 of 5/8 or 10/256
9. Miss Caroline Baker
906 Royal Street--Apt. D
New Orleans, Louisiana 1/16 of 5/8 or 10/256
10. Mrs. Bethia Caffery McCay
c/o Percy L. McCay Whitney Bank
228 St. Charles
New Orleans 12, Louisiana 1/16 of 5/8 or 10/256
11. Mrs. Emma Caffery Jackson
34 Tokalon Place
Metairie, Louisiana 1/16 of 5/8 or 10/256
12. Mr. Donelson Caffery McCay
4724 Carondelet Street
New Orleans 15, Louisiana 1/32 of 5/8 or 5/256
24
13. Mrs. Bethia McCay Brown
320 Lakeside Drive
Monroe, Louisiana 1/32 of 5/8 or 5/256
14. Mr. Edward Rader Jackson, III
206 Jefferson Avenue
Metairie, Louisiana 1/32 of 5/8 or 5/256
15. Mr. Donelson Caffery Jackson
c/o Mr. Edward R. Jackson, III
206 Jefferson Avenue
Metairie, Louisiana 1/32 of 5/8 or 5/256
16. Mr. Lucius Howard McCurdy, Jr.
c/o Milling, Saal, Saunders, Benson &
Woodward
Whitney Building
New Orleans, Louisiana 1/64 of 5/8 or 21/2/256
17. Mr. John Anderson McCurdy
808 West Beach Pass
Pass Christian, Mississippi 1/64 of 5/8 or 21/2/256
-----------------------
256/256
In the event royalties payable hereunder become payable to more than thirty
(30) persons or payees, Lessee shall have the option of paying all royalty due
hereunder in one check to the credit of Lessor in the Whitney National Bank of
New Orleans, Louisiana, which bank and its successors is hereby designated as
Lessor's Agent and shall thereafter continue as the depository for all royalties
payable hereunder regardless of changes of ownership of the right to receive
said royalties.
19. It is specially agreed that if Lessee makes a bona fide effort to
properly pay royalties hereunder, this lease shall not be cancelled because of
an error in judgment or other mistake made in good faith by Lessee in the
payment of royalty; but the person to whom the royalty may legally be due, and
after the requirements of this lease as to notices of change of ownership set
out in paragraph 28 have been complied with, may make demand upon Lessee
25
therefor. Thereafter do default may be claimed until sixty (60) days after the
demand has been made upon Lessee by registered or certified mail, and Lessee has
failed to pay such royalty or to file a concursus proceeding and to deposit the
amount in question in the registry of the court.
20. Lessee agrees that it will keep accurate records of the tonnage of all
Salt Shipped under this agreement, as well as the prices actually received by it
for all Mine Run, Mill Run and Coarse Grades of Rock Salt shipped and sold, and
deliver to Lessor statements thereof.
Lessor, its agents and representatives, including certified public
accountants, shall have the right, annually, to inspect the records of Lessee
regarding the matters above set forth in this paragraph.
It is specifically provided that neither the making by Lessee nor the
acceptance by Lessor of any payment hereunder, including the payment of
royalties, shall prejudice the right of Lessor or Lessee to protest the
correctness thereof; provided, however, that unless same is protested in writing
within three (3) years after the close of the calendar year in which such
payment was made, the same shall, for all purposes, be considered correct,
conclusive and binding.
21. Lessee agrees that Lessor, its agents, engineers, and other
representatives shall have the right at its or their own risk and responsibility
to enter into the said mine or mines and other facilities, whether above or
below the surface of the earth, in order to survey, inspect, examine, certify or
measure the same, or any part or parts thereof, for any legal purpose, and for
these purposes to freely use the means of access to said mine or mines without
hindrance or molestation, and also to examine the maps of Lessee showing the
mine workings and improvements in and upon the leased premises. When requested
to do so by Lessor, Lessee shall furnish such copies of Lessee's blue prints or
maps as may be desired by Lessor.
26
The rights of entry, inspection and visitation herein granted shall be
limited to only once in any three (3) month period, and in each instance shall
be exercised only at a reasonable time, upon Lessor first giving Lessee five (5)
days advance notice in writing of the date or dates on which Lessor desires to
exercise such rights.
The rights of entry, inspection and visitation shall apply to Lessor as an
entirety, and not to individual lessors, it being intended that Lessee shall not
be required to make its facilities available for such entry, inspection and
visitation more often than once in any three (3) month `period. Each exercise of
the right as herein authorized may be more than one of the individual lessors,
together with their agents, engineers and other representatives.
22. All of the roads on Cote Blanche Island are private, none having ever
been made public, and Lessee agrees that it will at no time grant permission to
any state, parish, ward or other governmental subdivision to maintain or
otherwise work on any of said roads unless requested by Lessor in writing to
grant such permission. Lessee agrees to maintain 100% any road which may service
facilities or places used commercially by Lessee only. As to all roads or parts
of roads which are used in common by Lessee and other present or future tenants
or lessees, Lessee shall arrange with said other tenant or tenants for the costs
of such upkeep, and any dispute between Lessor and Lessee with respect to such
upkeep shall be determined by arbitration in accordance with the provisions of
paragraph 27. Lessor, its successors, heirs, agents and representatives shall at
all times have the free right to use all roads for its private purposes. No main
roads shall be fenced off or blocked. Auxiliary roads within Lessee's 160 acre
surface area may be enclosed at the discretion of Lessee.
27
23. At such time as this lease terminates for any cause or reason
whatsoever, the following provisions shall be applicable with reference to the
machinery, equipment, buildings and all things used in connection with the
operation of the mine:
A. In any and all events the mine shaft, guides and buildings shall be
left on the leased premises, without the necessity of payment by Lessor to
Lessee therefor.
B. As to all other property used in connection with the operation of
the mine, Lessor shall have the option to purchase the same from Lessee at
its then fair market value as is where is, but only if Lessor purchases all
of said other property. To determine whether it wishes to exercise this
option, Lessor shall have a period of sixty (60) days after receipt of
notice of termination of the lease from Lessee to inspect the property. On
or before the end of the sixty (60) day period Lessor shall notify Lessee
in writing whether or not it elects to exercise the option to so purchase
said other mining equipment and property. If Lessor elects to purchase the
property it shall have an additional sixty (60) days within which to
arrange for the payment therefor, which shall be made in cash to Lessee,
and title and right to possession thereof shall pass to Lessor on the date
of termination of the lease.
C. If Lessor fails to give the notice required by subparagraph 23B
above, or in the event Lessor does not elect to exercise its option to
purchase said other property, Lessee shall have the right to remove the
same from the premises, and shall have a period of six (6) months from the
date of termination of the lease to do so. This right of Lessee to remove
the remaining property includes the right to remove all
28
machinery, equipment and materials and other property, regardless of
whether or not attached to the building in which it is situated or the
manner of such attachment.
D. Any such property remaining at the end of the said six months
period shall become the property of the Lessor without the necessity of
Lessor paying Lessee therefor. On the other hand, at Lessor's option,
Lessor may within ninety (90) days thereafter require Lessee to remove any
property of Lessee it does not wish to remain on the premises, other than
the mine shaft, guides and buildings.
E. Any dispute between Lessor and Lessee in connection with the
matters contained in this paragraph 23 shall be determined by arbitration
in accordance with the provisions of paragraph 27.
24. Lessee agrees to hold Lessor harmless from all claims for damages or
injuries, including death of any person, or damage to property in connection
with the leased premises occurring through the negligence of Lessee, and to
defend any such suit brought against Lessor on account of such claim, and to pay
any judgment against Lessor resulting from any such suit. Lessee further agrees
that it will use due care and diligence to avoid damage to property or injuries
to persons, and Lessee will compensate Lessor for any damage or injury,
including reasonable attorney fees in case of suit, suffered by it as the result
of any damage or injury occurring through the negligence of Lessee.
Correspondingly, Lessor agrees to hold Lessee harmless from all claims for
damages or injuries, including death of any person, or damage to property in
connection with the leased premises, occurring through the negligence of Lessor,
and to defend any suit brought against Lessee on account of such claim, and to
pay any judgment against Lessee resulting from any such suit. Lessor further
agrees that it will use due care and diligence to avoid damage to property or
injuries to persons and Lessor will compensate
29
Lessee for any damage or injury, including reasonable attorney fees in case of
suit, suffered by it as the result of any damage or injury occurring through the
negligence of Lessor. If injury, loss-or damage is caused by the joint or
concurring negligence of Lessor and Lessee, then Lessor and Lessee shall be
liable in solido therefor, with right of contribution against the other party.
Both Lessor and Lessee agree to notify the other in writing within ten (10) days
of the receipt of notice by said party that a suit has been filed against it
which may result in any liability on the part of the other under the provisions
of this lease, and within sixty (60) days of the receipt of notice by said party
that a claim is being asserted against it, which may result in any liability on
the part of the other under the provisions of this lease.
25. It is recognized and understood that Lessee is considering an
arrangement hereunder it will exercise the rights hereunder in association with
another company, and the right of Lessee to assign this lease in whole or in
part to accomplish such purpose is expressly granted. In the event, however,
that Lessee does not enter into such an arrangement as contemplated, and ever
wishes to sell any of its rights hereunder, Lessor shall be given the privilege
of purchasing, the same if it meets any offer or bid which Lessee has received
for the same, by cash purchase within thirty (30) days of receipt of notice from
Lessee that such interest is for sale. A conveyance to a subsidiary or
affiliated company, or to the stockholders of Lessee, a merger, or the granting
of a mortgage or other security device shall not be considered a sale or
assignment for the purpose of this paragraph.
26. It is agreed and understood that the estate of either party hereto may
be assigned or sub-leased in whole or in part, subject to the provisions set
forth in paragraph 25 above; provided, however, that in the event Lessor, after
receiving notice of any proposed sale to be given by Lessee to Lessor, and
within the thirty (30) days granted Lessor to purchase the
30
interest offered for sale, does not wish to exercise its rights to purchase the
interest, but considers the prospective purchaser to be either financially or
morally undesirable, Lessor shall so advise Lessee in writing, setting forth its
objection to such prospective purchaser and its reasons therefor. If Lessee is
of the opinion that Lessor's objections are justified, Lessee will not
consummate the proposed sale. If, however, Lessee is of the opinion that
Lessor's objections are not justified, it shall so notify Lessor, and Lessor and
Lessee agree that this dispute shall be determined by arbitration in accordance
with the provisions of paragraph 27.
27. For the determination of any matter made subject to arbitration
hereunder, either party hereto may by written notice to the other appoint an
arbitrator. Thereupon, within twenty (20) days after giving of such notice, the
other shall by written notice to the former appoint another arbitrator. In
default of such second appointment within the twenty (20) day period, the
arbitrator first appointed shall be sole arbitrator. When any two arbitrators
have been appointed as aforesaid, they shall, if possible, agree upon a third
arbitrator and shall appoint him by notice in writing, signed by both of them in
triplicate, one of which triplicate notices shall be given to each party hereto
if twenty (20) days shall elapse after the appointment of the second arbitrator
without notice of appointment of the third arbitrator being given as aforesaid,
then either party hereto, or both parties jointly, may apply to any Judge of
either the District Court of St. Mary Parish or Orleans Parish, Louisiana, or
any Judge of the United States District Court for the Eastern District of
Louisiana, to appoint the third arbitrator, in which event the first appointment
so made shall be binding upon the parties. Upon appointment of the third
arbitrator (whichever way appointed as aforesaid), the arbitrators shall fix a
reasonable time and place for hearing, giving notice to each of the parties
hereto at least ten (10) days prior to the date of such hearing, and each party
hereto may submit such evidence as it may see fit. A majority vote of
31
the arbitrators shall constitute a final and binding determination of any matter
referred to them under any provision of this lease, and the arbitrators within
ten (10) days shall communicate their decision in writing to Lessor and Lessee.
In the event the arbitrators fail to communicate their decision in writing to
Lessor and Lessee within sixty (60) days from the date on which the hearing is
concluded, or within ninety (90) days from the date on which the third
arbitrator is appointed, whichever shall occur first, then their appointment as
arbitrators shall terminate and any action taken by them become null and void,
and either party hereto may thereupon again institute the procedure for
arbitration in the same manner as hereinabove set forth, as though no
arbitrators had theretofore been appointed.
Each party shall pay the expense of the arbitrator selected by or for it,
and the costs and expenses incurred in the preparation and presentation of its
evidence and the fees and charges of its witnesses and counsel, and all other
costs of the arbitration shall be equally divided between the parties hereto.
28. It is understood and agreed that no change or division whatsoever and
howsoever arising, relative to ownership of the land, royalties or lease, or any
part of the same, shall operate to increase the obligations or diminish the
rights of either party hereto, and that regardless of any such change or
division of ownership the leased land shall be developed and operated as an
entirety; and that notwithstanding any other actual or constructive knowledge or
notice whatsoever thereof, no such change or division shall be binding upon
either party unless and until after thirty (30) days written notice thereof,
together with certified copies of recordable written instruments evidencing such
change or divisions, shall have been delivered to the other party.
32
29. Lessor warrants and agrees to defend the title to the leased premises
and to maintain Lessee in possession thereof for all purposes of this lease, but
it is stipulated and agreed that, in the event of loss or failure of title, or
eviction of the Lessee, the responsibility of Lessor to Lessee for restitution,
reimbursement and/or damages, under such warranty, shall be limited solely to
the reimbursement of Lessee for all money actually received by Lessor as
Production Royalty. The amount received as Development Royalty, which includes
payment for salt removed in opening the shaft and working surfaces, is never to
be returned in any event. This return of Production Royalty is further
restricted in that no Production Royalty received by Lessor more than one (1)
year prior to the very date upon which demand for return of royalty shall be
made need be returned or shall be returnable hereunder. Nor shall the returnable
Production Royalty include either interest or severance taxes accrued or paid.
Also, only that portion of the returnable Production Royalty need be returned
which shall be applicable to that portion of .the property from which Lessee may
be evicted in the event such eviction be from less than the entire property.
Lessee hereby waives and renounces in favor of Lessor any claim, right, demand
or cause of action for a greater return or for damages. However, it is agreed
that Lessee may, at its option, discharge any tax, mortgage or other lien or
privilege which may rank prior to this lease and be subrogated to the rights of
the holders thereof, and to apply royalties accruing hereunder toward satisfying
the same.
30. If Lessor owns an interest in the leased premises less than the entire
fee simple estate, or no estate therein, then the royalties herein provided for
shall be paid to Lessor only in the proportion which its interest, if any, bears
to the whole and undivided fee.
31. All terms and express or implied covenants of this lease shall be
subject to all valid federal and state laws, executive orders, rules and
regulations of any regulatory
33
authority having jurisdiction, and this lease shall neither be terminated in
whole or in part, nor Lessee be held liable in damages, or failure to comply
therewith, if compliance is prevented by or if such failure is the result of any
such law, order, rule or regulation.
32. If Lessee should conduct any brine operations on the leased premises,
Production Royalty for the salt thus produced and shipped shall be computed
hereunder just as though the number of tons of Salt Shipped had been shipped as
Rock Salt. In the event Lessee advises Lessor that it has no further use for any
cavity so created and that such cavity may be used by Lessor, such cavity shall
be offered to Lessor free of cost to Lessor for use by Lessor, its successors
and assigns, in storing liquids. The outside casing or pipe installed for
production from any brine well or wells shall not be pulled by Lessee but shall
remain for use by Lessor, free of cost to Lessor. Lessee's use of any cavity
created by its brine operations shall not include the right to use same for
storage, but Lessee's right to use cavities otherwise created for such purpose
is expressly recognized. Lessee, however, shall not store any radioactive or
fissionable material in any such cavity. It is understood that Lessee, in its
sole judgment, shall determine when it has no further use for any such cavity
and as to whether or not to notify Lessor that it shall have the right to use
such cavity for its purposes.
It is agreed and understood that in the use of any such cavity or cavities
by Lessor no radioactive or fissionable materials shall be stored. Lessor
further agrees specifically to assume full responsibility and liability for any
loss or damage that Lessee may sustain in any manner arising out of or in
connection with the care and maintenance of any such cavity or cavities or the
use thereof, including, but not limited to, breaking into any mine or mines
and/or well or wells of Lessee, or loss or damage to any surface facilities or
structures of Lessee, and Lessor agrees immediately prior to the use of any such
cavities to indemnify Lessee against any
34
and all such loss and damage, and to furnish bond or carry adequate insurance
for the purpose, delivering to Lessee evidence hereof in an acceptable form;
provided, however, that before any such cavity is turned over to Lessor and
becomes the responsibility of Lessor, Lessor shall be given ample opportunity
and time to inspect and test the cavity, and shall be furnished access to all
records of Lessee concerning the physical characteristics of the cavity promptly
upon request by Lessor. If Lessor does not desire to assume responsibility for
the cavity it may refuse the tender thereof, in which event Lessee may remove
therefrom such portions of its equipment or material as it may desire and plug
and abandon such cavity, or Lessee may use such cavity for such purposes as it
may see fit, including the right of storage.
The term radioactive and fissionable, as herein used, does not apply to
normal hydrocarbons or chemical compounds but relates to material in an active
state of atomic decomposition, such as to be radioactive and which is dangerous
to persons or property.
33. In the event Lessor considers that Lessee has failed to conform or
comply with any of the express or implied obligations of this agreement, Lessor
shall notify Lessee in writing, setting forth specifically the respects in which
Lessor considers that Lessee has so failed to perform or comply, and Lessee
shall have sixty (60) days after receipt of such notice within which to remedy
or commence to remedy any such .defaults so alleged by Lessor. The delivery of
said notice to Lessee and the lapse of sixty (60) days thereafter shall be a
precedent condition to the bringing of any action by Lessor under this
agreement. If an adverse claim is asserted against the title of Lessor, or any
portion thereof', Lessee shall be entitled to withhold payment to Lessor to' the
extent of the disputed portion, or to provoke a concursus and deposit the
disputed amount in the registry of the court until such claim has been finally
determined or until
35
Lessor shall have furnished bend to Lessee in an amount and with sureties
satisfactory to Lessee, or other adequate security with respect to such claim.
34. When performance by Lessee hereunder is delayed or interrupted by lack
of labor or materials, or by fire, storm, flood, war, rebellion, insurrection,
riot, strike, differences with workmen or failure of carriers to transport or
furnish facilities for transportation, or as a result of some order, requisition
or necessity of the federal or state government, or any governmental
subdivision, or as the result of any cause whatsoever beyond the control of
Lessee, the time of such delay or interruption shall not be counted against
Lessee, anything in this lease to the contrary notwithstanding. During any
calendar year within which less than the minimum number of tons of salt may be
shipped and such force majeure as is defined herein shall occur, then and in
that event, the minimum number of tons of salt required to be shipped shall be
reduced proportionately, that is to say, as the ratio of the number of days
covered by the force majeure shall bear to 365 days (for example, if the force
majeure should cover a period of 14 days, the minimum number of tons of salt
required to be shipped shall be reduced by 14/365).
The foregoing provisions of this force majeure clause shall not be so
interpreted under any circumstances as to extend the term of this lease beyond a
period of ninety-nine (99) years from the effective date hereof.
By the same token, in the event any such force majeure as described above,
shall occur and operate to impair-the ability of Lessor to perform any
obligations hereunder Lessor shall be similarly excused from performing during
the existence of the force majeure and shall have a similar length of time after
the force majeure has ended to perform.
36
35. In the event Lessee obtains a title opinion or title opinion or
supplemental title opinion or opinions upon the property herein leased, two
unsigned carbon copies thereof shall be furnished to Lessor.
36. If Lessee shall cause any of the exterior or interior lines of the
property covered by this lease to be surveyed, Lessee shall furnish Lessor with
four copies or prints of such survey or surveys. Lessee agrees that before
having any such survey made, it will request Lessor in writing to submit the
names of at least three (3) registered surveyors property licensed by the State
of Louisiana, and Lessee agrees that it will use one of the surveyors on the
list submitted by Lessor for any survey it has made on the leased premises,
provided, however, that if Lessor fails to submit such list of approved
surveyors to Lessee in writing within a period of thirty (30) days from the date
of receipt by Lessor of Lessee's request to submit such a list of names of
surveyors satisfactory to Lessor, Lessee shall then have the right to select any
surveyor of its choice who is properly licensed in the State of Louisiana.
Lessee shall also furnish Lessor with four copies or prints of all maps
submitted by it to any parish, state or federal regulatory body in connection
with any proposed action, if there is such regulatory body or if such-map is
required.
37. Lessee shall not cut, damage or use oak trees growing upon the premises
leased wherever it is possible to conduct its operations without disturbing the
same; provided, however, that Lessee shall have no liability for damage to trees
resulting from its normal operations.
38. Any notice, request, approval, consent, exercise of an option or
election, furnishing of a report, statement, record, map, document, or other
instrument or communication
37
pursuant to any provision hereof shall be deemed sufficiently given, delivered,
furnished or served if sent by certified or registered mail addressed,
respectively, to the following:
A. TO THE LESSOR:
1. John Taylor Caffery 1572 Henry Clay Avenue New Orleans 18,
Louisiana
2. The J.M. Burguieres Company, Ltd. Louisa Post Office,
Louisiana
B. TO THE LESSEE:
1. The Carey Salt Company Hutchinson, Kansas
Either Lessor or Lessee shall have the right to change the person or
persons above designated to receive any such communication or instrument, or the
address to which any such person should be addressed, by giving written notice
thereof to the other signed by the persons then designated, or in the event. of
Lessor, if not signed by those designated, in lieu thereof signed by such of the
parties constituting Lessor then entitled in the aggregate to receive at least
51% of-the royalties due hereunder; provided, however, that neither Lessee nor
Lessor shall be entitled to designate more than two (2) such parties and, in the
event more than two (2) are designated, the other party may, at its option,
select any two of those designated as to whom the provisions of this paragraph
shall apply.
In the event of the death or incapacity of any individual or the
liquidation or dissolution of any corporate party designated by Lessor under the
provisions of this paragraph, another person shall be designated in his stead,
by written notice signed by such of the parties constituting Lessor as are then
entitled in the aggregate to receive at least 51% of the royalties due
hereunder; provided that in absence of such notification and designation
communications and instruments sent in accordance with the previous designations
shall be valid and binding.
In all instances in which Lessor is required or empowered herein to give
notices to Lessee, to make requests of Lessee, to advise Lessee of approvals or
grant consents to Lessee, to
38
appoint arbitrators, to exercise options or any similar rights or privileges
hereunder, same shall be made, given or sent to Lessee by the parties designated
by Lessor to receive notices under the provisions of this paragraph and, when so
given, shall be conclusively presumed to be on behalf of and shall be binding
upon all parties constituting Lessor. Notwithstanding the provisions of the
preceding sentence, however, whenever Lessor is require to consent to or approve
of a proposed action or operation by Lessee hereunder, such consent or approval
of such of the parties constituting Lessor and then being entitled in the
aggregate to receive at least 51% of the royalties due hereunder shall be
sufficient to enable Lessee to so act or operate and shall bind all of the
parties then constituting Lessor and their heirs, executors, administrators,
successors and assigns, whether or not notice of such consent or approval is
given by Lessor in the manner otherwise provided in this paragraph 38, and
whether or not the parties designated by Lessor under the provision of this
paragraph join in such consent or approval. Failure of Lessor to communicate to
Lessee whether or not any consent or approval requested of Lessor by Lessee is
granted within sixty (60) days from the mailing of such request shall be
equivalent to approval or consent of Lessor.
39. This agreement shall be binding upon, and, subject to other provisions
of this agreement, inure to the benefit of, the heirs, executors,
administrators, successors and assign of the parties hereto.
40. This lease may be executed by the parties separately, on different
dates, and in counterparts, but shall nevertheless be binding and effective as
of the date first written on the first page hereof.
IN WITNESS WHEREOF the parties hereto have executed this lease in quadruplicate
originals in the presence of the competent witnesses who have signed opposite
their respective names.
WITNESSES TO SIGNATURE OF
LESSORS:
LOIS DIECK LESSORS:
- ----------
LOIS DIECK
DOROTHY THOMPSON JOHN TAYLOR CAFFERY
- ---------------- -------------------
DOROTHY THOMPSON JOHN TAYLOR CAFFERY, Individually and as
agent and Attorney-in-Fact for Mrs.
Marcie Caffery Gillis, Col. Marcel
A. Gillis, Mrs. Bethia Caffery McCay,
Percy L. McCay, Mrs. Mary Louise Caffery
Ellis, Mrs. Emma Caffery Jackson, Edward
R. Jackson, Liddell Caffery, Mrs. Marion
Caffery Campbell, George Lee Campbell,
M.D., Mrs. Martha Gillis Restarick, Mrs.
Katherine Baker Senter, Miss Caroline
Baker, Mrs. Bethia McCay Brown, Donelson
Caffery McCay, Lucius Howard McCurdy,
Jr. and John Anderson McCurdy.
LOIS DIECK EDWARD RADER JACKSON, III
- ---------- -------------------------
LOIS DIECK EDWARD RADER JACKSON, III
DOROTHY THOMPSON DONELSON CAFFERY JACKSON
- ----------------
DOROTHY THOMPSON
BY: EDWARD RADER JACKSON, III, TRUSTEE
----------------------------------
EDWARD RADER JACKSON, III
LOIS DIECK
- ----------
LOIS DIECK
DOROTHY THOMPSON
- ----------------
DOROTHY THOMPSON
THE J.M. BURGUIERES COMPANY, LTD.
LOIS DIECK BY: JOAN BURGUIERES BROWN
- ---------- ---------------------
LOIS DIECK JOAN BURGUIERES BROWN, DIRECTOR
DOROTHY THOMPSON BY: EDWARD E.BURGUIERES
- ---------------- -------------------
DOROTHY THOMPSON EDWARD E.BURGUIERES, ASSISTANT
SECRETARY AND MANAGING DIRECTOR
WITNESSES TO SIGNATURE LESSEE:
OF LESSEE:
DAVID L. JOHNSTON THE CAREY SALT COMPANY
- -----------------
WILLIAM B. SWEARER BY: HOWARD J. CAREY, JR.
- ------------------ --------------------
HOWARD J. CAREY, JR., PRESIDENT
39
ENTRY N. 153936 RECORDED IN CONVEYANCE BOOK 17-S AT FOLIO 870
STATE OF LOUISIANA
PARISH OF ST. MARY
ACT OF AMENDMENT TO SALT LEASE
------------------------------
THIS ACT OF AMENDMENT, made and entered into as of the 30th
day of May, 1973, by and between THE J. M. BURGUIERES CO., LTD. and JOHN TAYLOR
CAFFERY, individually and as Agent and Attorney in Fact of the persons listed on
the Exhibit attached hereto as Exhibit "A", pursuant to and by virtue of powers
of attorney of record in St. Mary Parish, Louisiana, or attached hereto, being
the owners of all mineral, royalty, surface and leasing rights in and to the
lands more particularly described in that certain Salt Lease dated June 21,
1961, recorded in Conveyance Book 11-U, Entry No. 111822 of the records of St.
Mary Parish, Louisiana, (hereinafter referred to as "Lease") hereinafter
collectively referred to as "LESSORS", and DOMTAR CHEMICALS INC., a Delaware
corporation, owner of all of the rights of the Lessee under the above Lease
hereafter referred to as "LESSEE".
W I T N E S S E T H
-------------------
For and in consideration of good and valuable considerations
the receipt and adequacy of which is hereby acknowledged) and of the mutual
advantages and obligations of the parties as set out hereinbelow, Lessors and
Lessee hereby agree to amend the Lease, effective as of the date hereof, as
follows:
1.) Sub-paragraph 9 (M) is hereby deleted and replaced by
the following:
"`Average Price' means, for the period involved, the average
price per ton received by Lessee from the sale in bulk of Rock Salt
produced from the leased premises, in the following grades; Coarse Rock
Salts, Mine Run or Mill Run Rock Salt and Ice Control Salt. The said
`Average Price shall be determined by dividing the total dollars
received by Lessee from the sale in bulk of Rock Salt of the said
grades of f.o.b. mine (or adjusted to allow for any freight factor
included in the price) by the total tonnage of the said grades sold.
Provided, however, that
there shall be deducted from the total dollars received in respect of
the sale of Salt the cost to Lessee of depot operations, Y.P.S. process
and additives allocable to such Salt sold. There shall be included in
such determination for any period involved the tons of Mine Run or Mill
Run Rock Salt used or consumed by Lessee, its successors or assigns,
and not sold to a purchaser, as though sold at the Current Market Price
of Mine Run or Mill Run Rock Salt prevailing on the last day of the
period in question."
2.) Sub-paragraph 9 (T) is hereby deleted and replaced by
the following:
"(T) `Current Market Price of Mine Run or Mill Run Rock Salt'
shall be considered to be the average price obtained by Lessee, F.O.B.
mine, from all sales of such salt by Lessee of quantities in excess of
five thousand (5,000) tons during any calendar year."
3.) The initial sub-paragraph of paragraph 38 is hereby
deleted and replaced by the following:
"Any, notice, request, approval, consent, exercise of an
option or election, furnishing of a report, statement, records, maps
document or other instrument or communication pursuant to any provision
hereof shall be deemed sufficiently given, delivered, furnished or
served if sent by certified or registered mail addressed, respectively,
to the following:
A. TO THE LESSORS:
1. John Taylor Caffery
1572 Henry Clay Avenue
New Orleans, Louisiana 70118
2. The J. M. Burguieres Co., Ltd.
Suite 1800, 225 Baronne Street
New Orleans, Louisiana 70112
B. TO THE LESSEE:
1. Domtar Chemicals, Inc.
Chicago O'Hare Aerospace Office Center
406 - 9950 Lawrence Avenue
Schiller Park, Illinois
with copy to:
Domtar Chemicals, Inc.
P. 0. Box 7210
2
Montreal 101, Canada
Attention: Mr. Andre Gascon"
4.) The Lease is amended by adding thereto the following:
"Anything herein contained to the contrary notwithstanding,
the only royalties to be paid by Lessee to Lessors on account of Salt
Shipped shall be paid in accordance with the Royalty Schedule set forth
on Exhibit `B' to this amendment. The quarterly royalty payments to be
paid by Lessee to Lessors on account of Salt Shipped shall be
provisionally based on the Average Price for the immediately preceding
calendar year. Such provisional royalties payable shall be calculated
by multiplying the appropriate Base Production Royalty in Exhibit `B'
by the total tonnage of Salt Shipped in such quarter. The appropriate
Base Production Royalty shall be determined from the column titled
`Base Production Royalty' which is directly opposite the range into
which the Average Price for the immediately preceding calendar year
falls in the columns titled `Average Price'. For the purpose of
determining whether an underpayment or overpayment of royalties has
occurred in the preceding calendar year, within the first quarter of
each year, Lessee shall determine the average price for the preceding
year (herein referred to as `Actual Average Price'). In the event the
total Royalty paid by Lessee to Lessors during such preceding year
(herein referred to as `Actual Royalty Paid') is less than that which
would have been paid had the Actual Average Price been utilized as the
basis under Exhibit `B' for such royalty payments (herein referred to
as `Adjusted Royalty'), Lessee shall, within the first quarter of each
year, pay to Lessors the difference between Actual Royalty Paid and
Adjusted Royalty. In the event Actual Royalty Paid exceeds Adjusted
Royalty, Lessee may retain royalty thereafter accruing to Lessors until
Lessee has been fully reimbursed the amount of such excess Royalty
Payment. (Nothing herein contained shall change Lessee's obligations
under paragraph 14.)"
AS THUS AMENDED, the Lease shall remain in full force and
effect as originally executed.
Lessors hereby acknowledge that the aforesaid Lease is in full
force and effect and that Domtar Chemicals, Inc. is the proper current Lessee.
This agreement and all rights, interests, titles and
obligations of the parties hereto shall be binding upon and inure to the benefit
of the respective parties, their heirs, successors and assigns.
3
IN WITNESS WHEREOF, Lessors and Lessee have executed this
agreement in quadruplicate originals in the presence of the undersigned
competent witnesses as of the date hereinabove mentioned. WITNESSES:
_____________________________ ________________________________________________
JOHN TAYLOR CAFFERY, Individually and on
_____________________________ behalf of and as Agent for the other Owners and
Lessors
THE J. M. BURGUIERES CO., LTD.
_____________________________ By:_____________________________________________
"LESSORS"
_____________________________
DOMTAR CHEMICALS, INC.
____________________________ By:_____________________________________________
"LESSORS"
____________________________
4
AGREEMENT
AGREEMENT entered into as of this 21st day of November, 1990,
by and among:
THE J.M. BURGUIERES CO., LTD., ISLAND PARTNERSHIP and FIRST
NATIONAL BANK OF COMMERCE, as trustee for Carolina F. Baker
("Lessor"),
DOMTAR INDUSTRIES INC. ("Domtar"`), and
CAREY SALT COMPANY ("Assignee");
WHEREAS, Domtar is the Lessee under a Salt and Surface Lease
dated June 21, 1961, recorded C.O.B. 11-U. Entry No. 111822 of the records of
St. Mary Parish, Louisiana, by and between John Taylor Caffery, et al. as Lessor
and the Carey Salt Company as Lessee, as amended, which Lease as amended is made
a part hereof by reference as though set out herein in extenso (hereinafter
referred to as the "Lease");
WHEREAS, the Lease:
a. Provides in Section 25 that the Lessor shall have the
privilege of purchasing the leasehold interest of Lessee under
certain circumstances as fully set out in the Lease;
b. Provides in Section 25 that a leasehold mortgage or
other security device shall not be considered a sale or
assignment for the purposes of such Section;
c. Provides in Section 26 that in the event of a
proposed assignment Lessor shall have the right to object to a
prospective assignee;
d. Provides in Section 36 that Lessor may approve the
surveyor which will prepare a survey of the premises demised
under the Lease (the "Leased Premises"); and
e. Provides in Section 38 for certain notice provisions;
WHEREAS, Domtar desires to assign to Assignee its interest in
the Lease and all properties relating to the operation of the salt mine as set
out in an Agreement, as amended, furnished Lessor by Domtar under cover of
letters dated September 29, 1989, November 9, 1990 and November 14, 1990 (the
"Assignment(degree)) which letter and the Agreement enclosed therein are made a
part hereof by reference as though set out herein in extenso (such interest is
hereinafter referred to as the "Leasehold Interest"); and
WHEREAS, Lessor is willing to consent to the Assignment and
approve the Assignee in consideration of and on the basis of the agreements set
out herein, without admitting in any way that the form of the September 29, 1989
letter complied with the terms of the Salt and Surface Lease.
NOW, THEREFORE, THIS INSTRUMENT WITNESSETH:
1. Effective the data of Assignment of the Leasehold Interest
to Assignee, the Lease is deemed to be modified so as to add a provision to
Section 24 providing that Lessor will be named as an additional assured in
Lessee's liability policies in the insured amount of $20,000,000.00 per
occurrence with no lesser ceiling per claimant relating to the mine which is
located in and under the leased property and that Leases shall carry insurance
in sufficient amounts with carriers reasonably acceptable to Lessor which shall
insure the continuation of the payment of royalties for up to two years in
annual amounts equal to the annual Production Royalty payable with respect to
1,500,000 tons of salt even though the mine on the leasehold properties may be
unable to produce for any reason, including but not limited to mine disaster or
any other business interruption. Lessee shall from time to time deliver such
certificates of insurance as Lessor may reasonably request to evidence the
existence of the coverages repaired by this Section.
2
2. Effective the date of the Assignment of the Leasehold
Interest to Assignee, section 16 of the Lease is deemed to be amended so that
"MINIMUM NUMBER OF TONS OF SALT TO BE SHIPPED" commencing January 1, 1990 and
for the remaining term of the Lease shall be one million (1,000,000) tons per
year.
3. At the date and time of the Assignment of the Leasehold
Interest to Assignee, Domtar shall pay to Lessor the sum of TEN DOLLARS ($10.00)
and other valuable consideration, which amount shall be over and above any and
all other payments due to the Lessor under the Lease.
4. In consideration of the agreements and payments herein set
out, the Lessor:
a. Hereby advise Domtar and the Assignee that they do
not wish to purchase the Leasehold Interest of Domtar;
b. Hereby waive and release the option to purchase under
the provisions of Section 25 of the Lease for the purposes of
this transaction only;
c. Approve Assignee as a lessee under the provisions of
Section 26 of the Lease;
d. Grant to Domtar the right to assign the Leasehold
Interest to Assignee and stipulate that they have no further
objections of any sort to such assignment;
e. Approve the use of the services of Gandolfo, Kuhn &
Luecke to survey the Leased Premises for Lessee's own
purposes, provided that four (4) copies of any such survey
will be provided to Lessor, that such survey shall not be used
in any respect for any purposes between Lessor and Lessee, and
that the Lessor shall not in any way be deemed to vouch for
the accuracy of the survey.
3
5. Lessor acknowledges that:
a. The Lease is in full force and effect and has not
bean amended or modified except by Act of Amendment to Salt
Lease dated as of May 30, 1973, recorded Entry No. 153935,
C.O.B. 17-S, folio 870 of the records of St. Mary Parish, and
b. To the best knowledge of Lessor, there are no
defaults by Lessee thereunder.
6. Effective the date of the Assignment of the Leasehold
Interest to Assignee, the Lease is hereby amended to add the
following provision after section 40 thereof:
"41
a. For the purpose of this Section 41, the following
definitions shall apply: The term "Mortgagee" shall mean any
bank, bank holding company, savings and loan association,
trust company, credit corporation, insurance company or
pension fund (including any entity acting as trustee or agent
for any of the foregoing), having assets in excess of One
Billion Dollars ($1,000,000,000.00), or a wholly-owned
subsidiary of any of the foregoing entities. The term
"Nominee" shall mean a direct or indirect wholly-owned
subsidiary of a Mortgagee.
b. Lessee is hereby given the right by Lessor to
mortgage to one or more Mortgagees its interest in this Lease,
under one or more mortgages or other security devices (a
"Mortgage"), and as collateral security for such Mortgage(s),
to give to such Mortgagee(s) a lien, assignment and/or
security interest in (i) any personal property included within
this Lease and (ii) the income, receipts, revenues and profits
of the premises demised under this, Lease (the "Leased
Premises") save and except the Lessor's royalties. If Lessee
shall mortgage this Lease and if any such Mortgagee shall send
to Lessor a true copy thereof, together
4
with written notice specifying the name and address of the
Mortgagee, Lessor agrees that so long as such Mortgage shall
remain unsatisfied, the following provisions shall apply: (i)
Lessor shall not agree to a consensual cancellation,
termination, surrender, or modification of this Lease by
Lessee, without the prior consent in writing of such Mortgagee
and no such consensual cancellation, termination, surrender or
modification without such prior consent shall be binding on
such Mortgagee: and (ii) Lessor shall, upon sending Lessee any
notice of default, simultaneously send a copy of such notice
to such Mortgagee(s), at the same time and in the same manner
that such notice is sent to Lessee, and to such addresses as
may be designated in a written notice from such Mortgagee(s)
received by Lessor. No notice given by Lessor to Lessee shall
be binding upon or affect a Mortgagee unless a copy of such
notice shall be given to the Mortgagee pursuant to this
subparagraph (b). In addition to the other rights of the
mortgagee(s) set forth in this Paragraph 41, such Mortgagee(s)
shall after service of any such notice upon it, have the right
to cure and cause the cure of any default by Lessee hereunder,
and Lessor shall accept such performance by or at the
instigation of such Mortgagee(s) as if the same had been done
by Lessee.
c. Before giving any notice of election to terminate
this Lease. Lessor shall allow Mortgagee the same cure periods
given to Lessee hereunder to cure such default, running
concurrently with the cure period afforded to Lessee.
d. In the event of a default by Lessee in the
performance of any term, covenant, condition or agreement on
Lessee's part to be performed under this lease of a nature
that cannot practicably be cured by Mortgagee without taking
5
possession of the Leased Premises, or of a nature that is not
susceptible of being cured by Mortgagee, Lessor shall not
terminate this Lease by reason of such default, if and so long
as (i) in the case of a default which cannot practicably be
cured by Mortgagee without taking possession of the Leased
Premises, Mortgagee shall deliver to Lessor, prior to the date
of which Lessor shall be entitled to terminate this Lease, a
written instrument in which Mortgagee agrees to commence
foreclosure proceedings or take any other steps or actions to
obtain possession of the Leased Premises, and Mortgagee
thereafter commences such proceedings or actions within a
reasonable time, diligently prosecutes the same to completion
(unless in the meantime the Mortgagee acquires Lessee's
interest under this Lease, either in its own name or through a
Nominee), and upon obtaining possession of the Leased Premises
(including possession by a keeper, receiver, Nominee of
purchaser at a foreclosure or other sale), diligently and with
continuity proceeds to cure such default and effects a cure of
such default; or (ii) in the case of a default which is not
susceptible of being cured by Mortgagee, Mortgagee shall,
within a reasonable time, institute foreclosure proceedings or
take any other steps or actions to obtain possession of the
Leased premises, and diligently prosecute the same to
completion (unless in the meantime, Mortgagee acquires
Lessee's interest under this Lease, either in its own name or
through a Nominee). Mortgagee shall not be required to
continue to proceed to obtain possession, or to continue in
possession of the Leased Premises pursuant to clause (i), or
continue to prosecute foreclosure proceedings or any other
action pursuant to clause (ii) above, if and when such default
shall be cured. If
6
Mortgagee, its Nominee, or a purchaser at a foreclosure or
other sale shall acquire title to Lessee's interest in the
Lease and shall cure all of Lessee's defaults under this
Lease, which defaults mortgagee received notice of in
accordance with the terms of this Section 41, and which are
susceptible of being cured by such mortgagee or by such
Nominee or purchaser, as the case may be, within the time
reasonably required therefor, then the defaults of any prior
holder of Lessee's interest in this Lease which are not
susceptible of being cured by such Mortgagee (or by such
Nominee or purchaser) shall not be deemed to be defaults under
this Lease as between Lessor and the Mortgagee, its Nominee or
such purchaser.
e. No mortgagee or its Nominee shall become liable under
the provisions of this Lease unless and until such time as it
becomes the owner of Lessee's interest in this Lease.
f. (i) In the case of termination of this Lease by reason of
any default or for any other reason prior to the end of the
stated term of the Lease and if an assignment under subsection
(g) hereof is prohibited as a result of a bankruptcy, Lessor
shall give prompt notice thereof to each Mortgagee in the
manner provided is subsection (b) hereof. Lessor, on written
request of any such mortgagee, made any time within sixty (60)
days after the receipt of such notice by such Mortgagee, shall
execute and deliver a new lease of the Leased premises to the
Mortgages, or its Nominee, for the remainder of the term of
this Lease had this Lease not been terminated, upon all of the
terms, covenants and conditions contained in this Lease,
provided that the prospective tenant thereunder agrees to
comply with the requirements of this subparagraph (f). The
tenant under such
7
new lease shall (x) simultaneously with the delivery of such
new lease, pay to Lessor all unpaid rental, royalties and any
other amounts of money due under this Lease as if this Lease
had continued in effect up to and including the data o! the
commencement of the team of such new lease, and all reasonable
expenses, including reasonable attorneys fees, incurred by
Lessor in connection with any defaults by Lessee under this
Lease, the termination of this Lease and the preparation of
the new lease, less any amounts collected by Lessor from any
subtenants or other occupants of the Leased Premises in
payment of any obligations described hereinabove, and (y) cure
all defaults existing under the Lease which are susceptible of
being cured by such tenant under the new lease within the time
reasonably required therefor.
(ii) Any such new lease shall maintain the same priority as
this Lease with regard to any mortgage affecting the teased
Premises or any part thereof or any other rights, liens or
encumbrances thereon. The provisions of the immediately
preceding sentence shall be self-executing, and Lessor shall
have no obligation to do anything, other than to execute and
deliver such new lease, to assure to the tenant under such new
lease good title to the leasehold estate created thereby.
(iii) If more than one Mortgagee requests a new lease
pursuant to this subparagraph (f), the Lessor shall recognize
as the Mortgagee entitled to receive such new lease the holder
of the Mortgage with the highest lien priority.
(iv) Any new Lessee must accept all Lessee obligations and
responsibilities and acquire all Lessee's assets (relating to
or used in connection with the Leased premises that are
necessary to discharge Lessee's obligations under the Lease),
8
which- are then in existence and owned by Lessee at the time
of the execution of the new lease. Further, there may be no
partial assignment of lessee's rights under the Lease.
g. Lessee shall have the right to assign this Lease to a
Mortgagee or to a Nominee of such Mortgagee (provided that, in
the case of an assignment to a Nominee of a mortgagee, the
mortgagee shall guarantee the Nominee's obligations to pay
royalties and to maintain the insurance provided for herein).
The provisions of Sections 25 and 26 of this Lease shall not
apply to the acquisition by the Mortgagee or such Nominee of
Lessee's interest hereunder as a result of foreclosure of a
mortgage, exercise of a power of sale or by assignment in lieu
of foreclosure or any first transferee of either of them,
provided the Mortgage& or a Nominee or the first transferee of
the Mortgagee or such Nominee of the estate created under this
Lease (i) shall have a net worth immediately after such
transfer that is equal to or greater than the net worth of
Casey Salt Company immediately after its acquisition of the
Lessee's interest in this Lease, (ii) has or will have
supervisory personnel at the Leased premises who are
experienced in underground mining operations, and (iii) as to
the Mortgagee at the time of such taking of title (or if there
is more than one Mortgagee, then the holders or participants
of at least ten per cent (lot) of the debt secured by the
Mortgage) shall have a rating by Moody's or Standard and
Poor's on their respective long term debt of at least the
minimum "investment" grade. Any transfers of this Lease
thereafter occurring shall be subject to Sections 25 and 26 of
the Lease. Unless an assignment pursuant to this subsection
(g) is prohibited
9
by bankruptcy, Messes will take any steps necessary to
effectuate as assignment and render unnecessary the execution
of a new lease pursuant to subsection 6(f)."
7. The Lease, as amended by this Agreement and the
Amendment to salt Lease dated May 30, 1973, is hereby ratified
and confirmed.
WITNESS the signatures of the parties on the data first above
set out.
WITNESSES: LESSOR:
THE J.M. BURGUIERES CO., LTD.
________________________________ By:___________________________________
Its:__________________________________
________________________________
ISLAND PARTNERSHIP
________________________________ By:___________________________________
Its:__________________________________
________________________________ By:___________________________________
Its:__________________________________
By:___________________________________
Its:__________________________________
FIRST NATIONAL BANK OF COMMERCE,
as Trustee for CAROLINE F. BAKER
________________________________ By:___________________________________
Its:__________________________________
________________________________
DOMTAR INDUSTRIES INC.
________________________________ By:___________________________________
Its:__________________________________
________________________________
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ASSIGNEE:
CAREY SALT COMPANY
________________________________ By:___________________________________
Its:__________________________________
________________________________
11
ENTRY N. 258,785 RECORDED IN CONVEYANCE BOOK 40-0 AT FOLIO 532
BY AND BETWEEN STATE OF LOUISIANA
ISLAND PARTNERSHIP, ET AL
AND CAREY SALT COMPANY PARISH OF ST. MARY
AMENDMENT TO SALT AND SURFACE LEASE
KNOW ALL MEN BY THESE PRESENTS THAT:
THIS ACT OF AMENDMENT is made and entered into as of the 1st
day of July, 1997, by and between
ISLAND PARTNERSHIP (TIN: 72-1172684), a Louisiana partnership whose
Articles of Partnership were recorded September 6, 1990 with the Office
of the Louisiana Secretary of State under Charter No. 34363277J and in
Partnership Book 10, page 931, under Entry No. 555 of the Recorder's
office of St. Mary Parish, Louisiana, domiciled in Jefferson Parish,
Louisiana, appearing herein through and being represented by CAFFERY
McCAY, RADER JACKSON and K. B. SENTER, duly authorized pursuant to the
terms and provisions of the aforesaid Articles of Partnership, whose
mailing address is 332 Friedrichs Avenue, Metairie, LA 70005;
JMB PARTNERSHIP (TIN: 72-1324158), a Louisiana partnership whose
Articles of Partnership were recorded May 31, 1996 with the Office of
the Louisiana Secretary of State and in Partnership Book 12, under
Entry No. 602 of the Recorder's office of St. Mary Parish, Louisiana,
domiciled in Franklin, St. Mary Parish, Louisiana, appearing herein
through and being represented by RONALD C. CAMBRE, its President, duly
authorized by authority delegated to him at the annual meeting of the
Partners of JMB Partnership held January 27, 1997, whose mailing
address is P. O. Box 333, Franklin, LA 70538-0333; and
CAROLINE F. BAKER TRUST #1 (TIN: 72-6125336), a Louisiana intervivos
trust recorded February 2, 1988 in Book 30-Z, folio 584, under Entry
No. 221709, of the Conveyance Records of St. Mary Parish, Louisiana,
appearing herein through and being represented by FIRST NATIONAL BANK,
OF COMMERCE, its Trustee, said bank appearing herein through and being
represented by CHRISTIAN FATZER, JR., its Assistant Vice President and
Trust Officer, duly authorized by resolution of the Board of Directors
of said bank, a certified copy of which is annexed hereto and made a
part hereof, whose mailing address is P. O. Box 60279, New Orleans, LA
70160;
(hereinafter collectively referred to as "LESSORS"), AND
CAREY SALT COMPANY (TIN: 13-3563048), a Delaware corporation,
authorized to do and doing business in the State of Louisiana,
appearing herein through and being represented by JOHN S. FALLIS, its
Vice President, duly authorized, whose mailing address for the purpose
of this instrument is P. O. Box 10, Lydia, LA 70569
(hereinafter referred to as "LESSEE")
WITNESSETH
----------
LESSORS declared that they are the owners of all mineral,
royalty, surface and leasing rights in and to the lands more particularly
described in that certain SALT AND SURFACE LEASE dated June 21, 1961, recorded
in Book 11-U, under Entry No. 111822 of the Conveyance Records of St. Mary
Parish, Louisiana; as supplemented by the SELECTION OF SURFACE ACREAGE dated
October 9, 1961, filed October 19, 1961, recorded in Book 11-X, folio 444, under
Entry No. 112825 of the Conveyance Records of St. Mary Parish, Louisiana; as
amended by ACT OF AMENDMENT TO SALT LEASE dated May 30, 1973, filed May 31,
1973, recorded in Book 17-S, folio 870, under Entry No. 153936 of the Conveyance
Records of St. Mary Parish, Louisiana, as further amended by AGREEMENT dated
November 21, 1990, filed November 26, 1990, recorded in Book 33-Z, folio 186,
under Entry No. 232548 of the Conveyance Records of St. Mary Parish, Louisiana,
(hereinafter collectively referred to as the "Lease") and in and to the lands
hereinafter described.
For and in consideration of good and valuable consideration
and of the mutual advantages to be derived, LESSORS and LESSEE hereby agree to
amend the Lease, as of the effective date hereof, as follows:
1. LESSORS and LESSEE do release from the lands covered by the
Lease the following described property, to-wit:
That certain tract or parcel of land lying and being situated
in Section 20, T15S-R7E, St. Mary Parish, Louisiana, being
more particularly shown, designated and described as Tract
"EFGHIJKE" on plat of survey entitled
2
"PLAN OF LAND SHOWING PROPERTY OF ISLAND PARTNERSHIP, ET AL TO
BE RELEASED FROM AND TO BE ADDED TO LEASE TO CAREY SALT
COMPANY" made by Lamon G. Miller, P.L.S, dated April 18, 1997,
bearing Drawing No. 9694, a copy of which is annexed hereto
and made a part hereof for greater particularity as to
description, containing 12.0879 acres.
2. LESSORS and LESSEE do add to and include in the lands
covered by the Lease (and, accordingly, LESSORS do grant, lease, let and hire
unto LESSEE) the following described property, to-wit:
That certain tract or parcel of land lying and being situated
in Sections 19 & 20, T15S-R7E, St. Mary Parish, Louisiana,
being more particularly shown, designated and described as
Tract "ABCDA" on plat of survey entitled "PLAN OF LAND SHOWING
PROPERTY OF ISLAND PARTNERSHIP, ET AL TO BE RELEASED FROM AND
TO BE ADDED TO LEASE TO CAREY SALT COMPANY" made by Lamon G.
Miller, P.L.S, dated April 18, 1997, bearing Drawing No. 9694,
a copy of which is annexed hereto and made a part hereof for
greater particularity as to description, containing 10.0589
acres.
EXCEPT AS HEREIN AMENDED, LESSORS and LESSEE declare that the
Lease shall remain in full force and effect.
LESSORS hereby acknowledge that the Lease is in full force and
effect and that CAREY SALT COMPANY is the proper current LESSEE.
This amendment and all rights, titles, interests and
obligations of the LESSORS and LESSEE shall be binding upon and inure to the
benefit of the respective parties, their heirs, successors or assigns.
LESSORS and LESSEE do hereby authorized and request the Clerk
of Court and Ex-Officio Recorder of Conveyances for St. Mary Parish, Louisiana,
to make mention of this amendment in the margin of his records in Book 11-U,
Entry No. 111822 of the Conveyance Records of St. Mary Parish, Louisiana, to
serve as occasion may require.
3
WITNESSES:
_________________________________ ISLAND PARTNERSHIP
_________________________________ By:____________________________________
CAFFERY McCAY
_________________________________
_________________________________ By:____________________________________
RADER JACKSON
_________________________________
_________________________________ By:____________________________________
K. B. SENTER
_________________________________
JMB PARTNERSHIP
_________________________________ By:____________________________________
RONALD C. CAMBRE, PRESIDENT
_________________________________
CAROLINE F. BAKER TRUST #1
BY: FIRST NATIONAL BANK OF
COMMERCE TRUSTEE
_________________________________ By:____________________________________
CHRISTIAN FATZER, JR., ASST.
VICE PRES. AND TRUST OFFICER
_________________________________
WITNESSES:
CAREY SALT COMPANY
_________________________________ By:____________________________________
JOHN S. FALLIS
_________________________________
4